playing the system-savingsVbenefits.

gerry257

I am planning early retirement. I have a pension of £110/week and a £40,000 payout. I`ve been on website "entitled to" and find that I get penalised for having capital/savings. Is there a legal way of hiding this money without having to spend it all in order to get these benefits?:money:

Errata

Your'e not being penalised. If you spend your capital rapidly in order to claim benefits it will be classed as deprivation of assets and you'll be turned down for any means tested benefits you might try to claim.

margaretclare

Is there a legal way of hiding this money without having to spend it all in order to get these benefits?

No, there is not. Hiding money in order to claim benefits to which you're not entitled, is called fraud. Same goes for giving it away with that intention.

Margaret

seven-day-weekend

But isn't it better to know you have this money for a rainy day rather than get rid of it (assuming there was a legal way to do so) and then have to rely on means-tested benefits which can be withdrawn at a Government's will?

I think spending it on things like maintaining your house, maintaining a modest lifestyle and buying a modest car can be classed as 'legitimate' ways to deprive yourself of capital, but in the end it is whether the DWP think you have done so in order to claim State Benefits that is the decider.

If they deem you have done this, you will not be entitled to any means-tested benefits anyway.

So if you do spend any, keep all receipts and Bank Statements.

EdInvestor

Capital placed in an investment bond is not counted for benefits purposes (or for care payments) as an IB is deemed to be an insurance policy which is exempt.If you take income from the bond (5% is allowed tax free annually) that will however be counted.

If you are thought to have put the money in the bond specifically to claim benefits , then you may be deemed to have voluntarily deprived yourself of assets, and then be deemed still to have them.

Also,since the budget changes to CGT, investment bonds are now unsuitable for most people, as they are taxed more heavily than alternatives such as unit trusts.
So you might find no-one is willing to sell you one.

seven-day-weekend

I agree with you Margaret. I was merely suggesting legitimate ways the OP could divest himself of the money. I understand he doesn't really want to spend it.

IWasWondering...

I am in (or shortly will be due to redundancy) a similar position. I have got savings so will not be able to claim benefits even though my income will be nil except for interest earned (which is neglible really). Except I think for JSA for six months.
I am in the position of being able to take my pension early if I want to but have decided to keep that for a 'rainy day'.
I do have some plans for my money. Landscape front garden. Change car. Medical operation (going private). So that will make a dent in it but it was already earmarked for these before I knew about the redundancy so I am will not be hiding it or spending it for the sake of it. I just have to accept that it's unfortunate in one sense that I can't claim but I am glad really that I don't have to and I will be looking for other employment.

seven-day-weekend

Yes, means-tested benedfits are for those that do not have enough money to live on, and if like the OP you have £40k in the bank then you DO have enough to live on, at least for a while.

I know it's a PITA having to spend it, but you really can't expect the taxpayer to subsidise you while you have this amount of money.

IWW, good luck with your operation.

EdInvestor

IWasWondering... wrote: »

I am in the position of being able to take my pension early if I want to but have decided to keep that for a 'rainy day'.

Check the rules on that. Beyond a certain age (IIRC) this is not allowed either, you must claim pensions you are entitled to, not "save it up for a rainy day" at the taxpayers' expense. .

seven-day-weekend

I wanted to say that about taking the pension too Edinvestor but wasn't absolutely sure of the rules. Thanks.

gerry257

thankyou all for your thoughts and replies re legally hiding £40000. I`ve phoned my pension dept. and have asked for a reduced lumpsum increasing my pension payouts. This will be the first time for me to be out of work and it has surprised me how much you can claim in various tax benefits, especially with two children still dependant. It was my initial intention to divide the 40000 lumpsum into 10 years of £4000year and add to that my pension payout. To me that would still maintain my pride and dignity. But when you do the sums and see what you get in return for having no finances you tend to loose your pride and think "if you can`t beat them join them". I must admit that it leaves me with the same opinion that if someone has put money aside for whatever reason and gone without during life then they deserve the same as the less frugal. Frustrating, but I can`t see it changing. any views will be welcomed